VCTS Announces Final Terms of its Reverse Take-Over by Melco China Resorts and a $70 Million Private Placement by Melco China Resorts



    /NOT FOR DISTRIBUTION TO UNITED STATES NEWSWIRE SERVICES OR FOR
    DISSEMINATION IN THE UNITED STATES/

    TRADING SYMBOL: "CTX.H" NEX

    VANCOUVER, March 14 /CNW/ - Virtual China Travel Services Co., Ltd.
("VCTS" or the "Company") (NEX: CTX.H) today announces that it has agreed to
amend the terms of its reverse take-over (the "Transaction") by Melco China
Resorts (Holding) Limited ("Melco China Resorts"), a corporation incorporated
pursuant to the Business Corporations Act (British Columbia).
    In connection with the Transaction, Melco China Resorts has engaged
Canaccord Capital Corporation to act as its lead agent, together with a
syndicate of agents including CIBC World Markets, Inc. (the "Agents") in a
private placement of subscription receipts to purchasers ("Placees") for gross
proceeds of approximately $70 million (including a subscription of $6 million
by an affiliate of Melco Leisure) (the "Private Placement").
    Prior to the Transaction, Melco China Resorts is expected to acquire
Melco China Resort Investment Limited ("Melco Cayman"), a corporation
incorporated pursuant to the laws of Cayman Islands, which through its
wholly-owned subsidiary, Melco China Resort Limited ("Melco HK"), a
corporation incorporated pursuant to the laws of Hong Kong, owns five ski
resorts in China.
    Melco China Resorts, Melco Leisure and Entertainment Group Limited
("Melco Leisure"), a company wholly-owned by Melco International Development
Limited ("Melco"), Ying Wah Consultants Limited ("Ying Wah"), a company
controlled by management and senior employees, consultants and agents of Melco
China Resorts group, and Hillwide Technology Limited ("Hillwide",
collectively, with Melco China Resorts, Melco Leisure and Ying Wah, the "Melco
Parties"), a company controlled by the management of Melco China Resorts
group, have executed a pre-amalgamation agreement with VCTS providing for the
amalgamation of VCTS and Melco China Resorts. The Transaction will be effected
by way of this amalgamation between Melco China Resorts and VCTS after, among
other things, the completion of the Private Placement, the acquisition of
Melco Cayman by Melco China Resorts (the "Melco Cayman Acquisition") and the
continuance of VCTS to the Business Corporations Act (British Columbia). A
summary of the amended material terms of the Transaction are briefly described
below.
    Pursuant to the Private Placement, each subscription receipt will be
deemed to be exchanged for one common share of Melco China Resorts and
one-half of a common share purchase warrant upon (i) satisfaction of the
conditions to effecting the Transaction, including obtaining the necessary
shareholder and regulatory approvals and (ii) satisfaction of the conditions
for the transfer of all of the outstanding shares of Melco Cayman to Melco
China Resorts pursuant to the Melco Cayman Acquisition. Each whole common
share purchase warrant is exercisable for one common share of Melco China
Resorts at a price of $0.40 per share, for a period of two years from the date
of exchange of the subscription receipts. Proceeds of the Private Placement
will be held in escrow and will not be released to Melco China Resorts until
such conditions are satisfied. As consideration of the services to be rendered
by the Agents, Melco China Resorts expects to pay to the agents a commission
(the "Commission") equal to 6.0% of the gross proceeds realized from the
Private Placement. It is expected that an aggregate of $1,500,300 of the
Commission payable to the Agents will be satisfied through the issuance of
subscription receipts under the Private Placement with the remainder to be
satisfied by way of a cash payment upon release of the escrowed proceeds.
Approximately 237 million common shares and 118.5 million common share
purchase warrants of Melco China Resorts are expected to be issued upon the
exchange of the subscription receipts.
    After the exchange of subscription receipts, Melco China Resorts is
expected to acquire Melco Cayman by issuing to current shareholders of Melco
Cayman common shares and non-voting shares of Melco China Resorts in exchange
for the interest in Melco Cayman. Non-voting shares of Melco China Resorts do
not carry a right to vote but have an equal right relative to common shares to
share in the assets of Melco China Resorts.
    The pre-amalgamation agreement sets forth the representations, warranties
and covenants made by the Melco Parties to VCTS and by VCTS to the Melco
Parties. Under the terms of the agreement, the maximum amount of liquidated
damages payable by the Melco Parties is $500,000 in connection with the
Transaction, although such maximum amount does not apply to any damages that
may be payable in the event of a material adverse effect caused by specified
title deficiences.
    The form of amalgamation agreement sets forth the exchange ratios of
securities of VCTS and securities of Melco China Resorts for securities of the
entity resulting from the amalgamation of Melco China Resorts and VCTS (the
"Resulting Issuer"). It is expected that:

    
    -   every ten common shares of VCTS shall be exchanged for one common
        share of the Resulting Issuer;

    -   options of VCTS exercisable for 4,800,000 common shares of VCTS shall
        be exchanged for options of the Resulting Issuer exercisable for
        480,000 common shares of the Resulting Issuer at $3.00 per share for
        a period of two years from the date of grant;

    -   every ten common shares of Melco China Resorts shall be exchanged for
        one common share of the Resulting Issuer;

    -   every ten non-voting shares of Melco China Resorts, if any, shall be
        exchanged for one non-voting share of the Resulting Issuer; and

    -   every ten whole common share warrants of Melco China Resorts shall be
        exchanged for one whole warrant exercisable to purchase one common
        share of the Resulting Issuer at an exercise price of $4.00 per share
        for a period of two years from the date of issuance.
    

    In addition, the form of amalgamation agreement shall appoint the initial
directors and officers of the Resulting Issuer. It is expected that the board
of directors of the Resulting Issuer will consist of seven directors, three of
whom are independent. The initial officers of the Resulting Issuer are
expected to be the officers of Melco China Resorts.
    Pursuant to the amalgamation, on a non-diluted basis, VCTS shareholders
are expected to be issued approximately 1.2 million common shares of the
Resulting Issuer, representing approximately 1.4% of the voting interest and
1.2% of the equity interest of the Resulting Issuer. Melco China Resorts
shareholders are expected to be issued in the aggregate approximately
64 million common shares of the Resulting Issuer, with (a) approximately
40.8 million common shares and approximately 9 million non-voting shares to be
held beneficially by Melco Leisure, representing approximately 49% of the
voting interest and approximately 54% of the equity interest of the Resulting
Issuer; (b) approximately 17.6 million common shares to be held beneficially
by shareholders of Ying Wah, representing approximately 20% of the voting
interest and approximately 18.4% of the equity interest of the Resulting
Issuer; (c) approximately 3.5 million common shares to be held beneficially by
Hillwide, representing approximately 4% of the voting interest and
approximately 3.6% of the equity interest of the Resulting Issuer and
(d) approximately 21.7 million common shares to be held in the aggregate by
the Placees and Agents, representing approximately 25% of the voting interest
and approximately 23% of the equity interest of the Resulting Issuer.
    As previously disclosed, subject to receipt of VCTS shareholder approval,
prior to the amalgamation with Melco China Resorts there will be a continuance
by VCTS under Business Corporations Act (British Columbia) (the "Continuance")
and a two-for-one share consolidation of existing VCTS common shares (the
"Consolidation").
    If the Transaction is not completed on or before May 31, 2008 (or such
other date as may be agreed to by the parties) VCTS or the Melco Parties may
exercise a right of termination. If such non-completion is solely as a result
of the fault of any of the Melco Parties (which shall be deemed to have
occurred if any of the Melco Parties or their affiliates fail to use
reasonable commercial efforts to complete the Transaction prior to the agreed
upon date) or the failure to procure shareholder, regulatory or third party
approvals required by any of the Melco Parties or their affiliates, other than
VCTS shareholder approval, the Melco Parties will reimburse VCTS up to a
maximum of $500,000 for certain expenses in connection with the transactions
contemplated by the agreement among the parties. The reimbursement of expenses
by the Melco Parties will be the sole remedy of VCTS for such non-completion.
As security, Melco Leisure has previously deposited with VCTS $100,000 and
will deposit (i) $50,000 within five business days of today and (ii) $150,000
within five business days of the date of mailing of the information circular
to shareholders of VCTS with respect to the Transaction.
    VCTS now expects to call a shareholders' meeting to be held in May 2008
to approve, among other things, the Continuation, the Consolidation and the
amalgamation with Melco China Resorts.
    As part of the Transaction, VCTS will also grant, as finders' fees,
options to acquire a total of 4,800,000 post-Consolidation common shares of
VCTS at an exercise price of $0.30 per share exercisable within two years of
the date of grant.
    A support agreement has also been entered into between Melco China
Resorts and the principal shareholders of VCTS (each holding more than 10% of
the outstanding common shares of VCTS) and Yow Lin Chu, the President, Chief
Executive Officer and a Director of VCTS, to support the Transaction.
    In connection with the Transaction, subject to shareholder approval, the
Hong Kong and Chinese subsidiaries of VCTS will be transferred to Yow Lin Chu.
Mr. Chu will assume all responsibility in connection with the operations of
the VCTS subsidiaries retroactively from August 31, 2007. In addition, VCTS
will repay an outstanding shareholder loan to Yow Lin Chu of approximately
$398,000 in two instalments, subject to payment of any expenses related to the
operations of the VCTS subsidiaries and any claims arising in connection
thereto.
    The completion of the Transaction is expected to occur on or before
May 31, 2008. The completion of the Transaction will, as previously disclosed,
be subject to the usual conditions of closing.
    The common shares of VCTS have been halted from trading since August 13,
2007 and will resume trading on the completion or termination of the
Transaction.
    VCTS has also filed today a material change report with the applicable
regulatory authorities.

    ABOUT MELCO CHINA RESORTS

    Immediately prior to amalgamation, the main asset of Melco China Resorts
will be Melco Cayman. Melco Cayman has acquired five ski resorts in China that
are located in Beijing, Heilongjiang Province and Jilin Province: (1) the
Yabuli Sun Mountain Resort ("Yabuli Resort"); (2) the Star Mountain Beijing
Resort ("Beijing Resort"); (3) the Adventure Mountain Changchun ("Changchun
Resort"); (4) the Lotus Mountain Club ("Lotus Resort") and (5) Sky Mountain
Beidahu (the "Beidahu Resort"). The Beidahu Resort is briefly described below.
Melco China Resorts plans to develop each resort in accordance with its
distinct setting and to expand the range and variety of mountain resort
experiences offered by its properties. This development is expected to attract
and maintain resort customer interest and the position of Melco China Resorts
as a leading owner and operator of village centred mountain resorts in China.
    The Beidahu Resort is the second most well known ski resort in China. The
Beidahu Resort is located 40 minutes from Jilin City accessible by a new
freeway and international airport. This resort was the host of the 2007 Asian
Winter Games. Substantial capital improvements have been completed at the
resort and include a new gondola, high speed chairlift, snowmaking equipment
and skier services (including restaurants, hotels, and rental shops) and other
support infrastructure. The resort consists of two main peaks providing 760m
of vertical drop that converge to flat land for the resort village development
at their shared base.

    Financial Information

    Melco China Resorts was incorporated in February 2008. An audit of the
financial position of the five ski resorts is currently in process. The
audited interim financial statements for Melco Cayman for the nine-month
period ended September 30, 2007 as well as the required pro forma financial
statements relating to the acquisition of the five ski resorts and to give
effect to the Transaction are expected to be included in the information
circular for the VCTS shareholders' meeting to approve, among other things,
the Transaction.

    ABOUT MELCO LEISURE AND MELCO

    Melco Leisure, the main beneficial shareholder of the Resulting Issuer,
is a wholly-owned subsidiary of Melco which is one of the companies with the
longest history in Hong Kong. Founded in 1910, Melco was among the first one
hundred companies established in the city and was listed on the Hong Kong
Stock Exchange in 1927. Melco is a constituent of the MSCI Hong Kong Index,
part of the MSCI Standard Index Series.
    Melco currently engages in four main business streams, namely
(i) Leisure, Gaming and Entertainment, (ii) Technology, (iii) Financial
Services, and (iv) Property and Other Investments. Melco's Leisure, Gaming and
Entertainment Division comprises the Group's gaming activities, ski resorts
and Jumbo Kingdom. Melco conducts its gaming activities in Asia via an
exclusive joint venture, Melco PBL Entertainment, with Crown Limited (formerly
Publishing & Broadcasting Limited or PBL), a top 50 company listed on the
Australian Stock Exchange. Melco PBL Entertainment (Macau) Limited ("MPEL") is
a NASDAQ-listed company owning one of only six gaming concessions and
subconcessions to own and operate gaming business in the Macau Special
Administrative Region. MPEL currently has three major gaming assets in Macau,
namely, Crown Macau, Mocha Clubs, and City of Dreams. MPEL is also in the
process of acquiring a development site on Macau Peninsula with plans to
establish its third hotel and casino complex in Macau. In 2006, Melco
commenced its venture through PAL Development Limited ("PAL") into the lottery
industry in the pan-Asian region. Bolstered by China's robust lottery market,
PAL has successfully launched services including technology support, venue
management and consultancy services to the official lottery authorities in
China. Expanding rapidly, PAL's service network covers over 500 lottery sales
outlets and is one of the largest lottery sales networks in the PRC. Its
subsidiary, Beijing Telenet Information Technology, is one of the largest
point-of-sale (POS) equipment suppliers approved by the China Sports Lottery
Administration Centre supplying POS equipment to 22 provinces. In
December 2007, the transaction involving the swapping of shares in PAL with
Wafer Systems Limited or Wafer (Stock Code: 8198), a company listed on the
Growth Enterprise Market (GEM) of the Hong Kong Stock Exchange was completed.
Following such transaction, Melco together with two business associates
respectively listed in Taiwan and Singapore, collectively hold a significant
interest in Wafer, which in turn holds the majority stake and operates the
lottery business of PAL. Also, it was recently announced by Wafer that,
subject to its shareholders' approval, it will change its name into "Melco
LottVentures Limited" in order to better reflect its principal business focus
on lottery-related business and its close operation relationship with Melco.
In Hong Kong, Melco carries on the tradition of operating the world famous
floating landmark, Jumbo Kingdom. The Group has two other supporting divisions
in Technology and Investment Banking. The Group's Technology Business is
represented by: (i) Elixir Group, a gaming technology solutions provider in
Asia specializing in the design, development and supply of gaming products and
technology solutions, and (ii) iAsia, which has built its reputation in the
area of online trading and financial technology. The support and synergy of
both Elixir and iAsia with the other group companies is critical to the
strength of the integrated Melco group-wide offer. The Group's Financial
Services Business is conducted via the Hong Kong listed subsidiary, Value
Convergence Holdings Limited.
    For more information, please visit www.melco-group.com.

    ABOUT VCTS

    VCTS through its 100% owned subsidiary in Hong Kong ("VCTS Hong Kong")
owns 60% interest in Shengtang Zhenye Science Technology Services Company Ltd.
("Shengtang"), which was previously known as Virtual China Travel Services Co.
Ltd., based in Beijing, China. Up to the end of 2005, VCTS Beijing's joint
venture partner was China Travel Services Group, a state-owned enterprise and
one of the largest travel services entities in China, with interests in
hotels, travel agencies, transportation companies, duty-free shops and
publishing throughout mainland China.
    VCTS currently has minimal operations and is largely inactive. VCTS had
previously focused on the e-travel sector in China and offered multimedia
solutions to assist in the promotional efforts of hotels, tourism related
operations, retailers and government organizations. Its e-travel portal
offered multimedia travel information to tourists, business travelers and
travel agencies. Due to insufficient capitalization and other unforeseen
factors, management decided to gradually decrease its emphasis in the e-travel
sector in China.
    In December 2006, the directors of VCTS approved the purchase by VCTS of
VCTS Hong Kong's ownership interest in Shengtang to simplify consolidation of
financial statements and reduce related expenses. Approval of this share
transfer is pending from Chinese regulatory authorities. VCTS Hong Kong will
become inactive upon the Chinese government's approval of this share transfer.

    Completion of the Transaction is subject to a number of conditions,
including, but not limited to, TSX Venture Exchange acceptance and, if
applicable pursuant to TSX Venture Exchange requirements, majority of the
minority shareholder approval. If applicable, the Transaction cannot close
until the required shareholder approval is obtained. There can be no assurance
that the Transaction will be completed as proposed or at all.
    Investors are cautioned that, except as disclosed in the management
information circular to be prepared in connection with the Transaction, any
information released or received with respect to the Transaction may not be
accurate or complete and should not be relied upon. Trading in the securities
of the Company should be considered highly speculative.

    The TSX Venture Exchange has in no way passed upon the merits of the
    Transaction and has neither approved nor disapproved the contents of this
    press release.

    The TSX Venture Exchange does not accept responsibility for the adequacy
    or accuracy of this release.

    FORWARD-LOOKING INFORMATION

    Information in this press release that is not current or historical
factual information may constitute forward-looking information within the
meaning of securities laws, and actual results may vary from the
forward-looking information. Implicit in this information are assumptions
regarding future operations, plans, expectations, anticipations, estimates and
intentions, such as the Company's amalgamation with Melco China Resorts, the
completion of the proposed private placement by Melco China Resorts and the
plans to develop the ski resorts in China.
    Specifically we have assumed that the Transaction, the private placement
by Melco China Resorts and any other related transactions would be completed
as planned. These assumptions, although considered reasonable by the Company
at the time of preparation, may prove to be incorrect. Readers are cautioned
that actual future operating results and economic performance of the Company
are subject to a number of risks and uncertainties, including general
economic, market and business conditions, uncertainty relating to land use
rights, adverse industry events for the ski and real estate industries, the
Company's ability to make and integrate acquisitions, the requirements of
recent Chinese regulations relating to cross-border mergers and acquisitions,
the inability to obtain required approvals or approvals may be subject to
conditions that are unacceptable to the parties, changing industry and
government regulation, as well as Melco China Resorts' ability to implement
its business strategies, and to raise sufficient capital, seasonality, weather
conditions, competition, currency fluctuations and other risks, and could
differ materially from what is currently expected as set out above.
    Forward-looking information contained in this press release is based on
our current estimates, expectations and projections, which we believe are
reasonable as of the date of this press release. The Company uses
forward-looking statements because it believes it provides useful information
with respect to the operation and financial performance of the Company, and
cautions readers that the information may not be appropriate for other
purposes. Readers should not place undue importance on forward-looking
information and should not rely upon this information as of any other date.
While we may elect to, we do not undertake to update this information at any
particular time.





For further information:

For further information: Virtual China Travel Services Co., Ltd., Joanne
Yan, Director, Tel: (604) 961-8188, or Tel: (604) 682-0777, Fax: (604)
682-7724, E-mail: info@vctsgroup.com; Melco China Resort Investment Limited,
Frank Tsui, Executive Director, Tel: (852) 3151 3777, Fax: (852) 3162 3579,
Email: franktsui@melco-group.com

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VIRTUAL CHINA TRAVEL SERVICES CO., LTD.

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